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5 Tips to Attract Investors through Crowdfunding

written by Editor, 17 November 2015

Guest blog by, Amanda Magri Overend, Digita Marketing Executive

crowdfunding

You have decided to launch or grow your business – and now you need investment. But where do you start? And which of the many forms of investment is right for your business?

Our economy continuously changes in many ways, however a lack of money and time are still primary reasons why small business fail to progress in a competitive market.


One approach is to attract investors through Crowdfunding, this is a great method to help to kick start a business, this approach allows individuals to raise capital for investment into their business idea in a timely and cost efficient way.

crowdfunding

Two primary types of crowdfunding are available:

  • Equity Crowdfunding: Investors expect a financial return. This may include interest payments and shares of ownership.
  • Donation Crowdfunding: Social equity is the goal of donation funding. Typical repayments are ‘thank you’ plaques, product discounts and perhaps one share of ownership.

There are many crowdfunding sites to search from which include a broad exposure to countless investors.
There are different objectives for crowdfunding, but all have common best practices. Here are 5 top tips for success:

1. Raise awareness

Dedicating time to promote your pitch to potential investors is key to gain recognition.  Some projects start slowly however you can pick up the pace by using mediums such as social media as a hook to help spread the word and encourage your supporters to do the same. Keep people interested!

2. Tell a story

A winning crowdfunded project easily captures the imagination of potential investors; they have a great story to tell and are easy to explain. Your pitch must inspire investors to back you, and that means appealing to their emotions, as well as their pockets.

The initial pitch should stir up potential questions from your investors so be prepared to engage with them and deliver the answers they are looking for.

3. Get people onboard

It is vital to connect with your potential customers before you launch your pitch, carrying out research is an important aspect to meet the needs of your customer base. Building momentum through word of mouth can help to launch your crowdfunding project! Get as many people interested as possible, potential investors are more likely to get stuck in if they can see that someone else believes in your idea too.

4. Which platform is right for you?

Here are a few crowdfunding sites to help you start off – Kickstarter – is one of the best known and others include Indiegogo and Crowdcube.

Most of the sites listed above build their efforts upon the basis of donations, with investors receiving a gift or reward in return for backing your business idea. However some sites are more traditional and provide a loan approach. There are also crowdfunding sites which provide direct contact with the investors and in return they gain a share in your company.

5. Have a plan in place

Create a detailed plan and set achievable objectives to show to your investors. The plan should outline what your next move is and what the investors will be contributing too every step of the way.

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